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 Buying Basics
 Buying Process
 Types of Cars
 New vs. Used

After years of studying hard to get your degree, you rightfully deserve to treat yourself. Like most recent grads, a new vehicle is the first major purchase you will make. With so many models and options to choose from, buying a new car can be an exciting yet complex process.

You will need to ask yourself several questions before you take ownership of your new vehicle:

  • Will you purchase or lease?
  • Should you buy new or used?
  • What is the optimal time frame for a lease or finance agreement
    2, 3, 5, or 7 years?
  • How much money should you put down on a purchase or a lease?
  • How much extra money will it cost to insure a new sports car
    compared to a subcompact vehicle?

As you already know, purchasing a vehicle requires a lot of thought. This section is intended to assist you in making a wiser decision when buying your vehicle.

Starting Point Terms

"Upside Down"- Negative Equity

Avoid being "upside down" or having negative equity in your vehicle. Negative equity simply means owing more for a vehicle than it is worth. Many consumers are opting to stretch their car financing out as far as 7 years to lower their monthly payments. Unfortunately if you try to trade a financed vehicle in too early, the vehicle's payoff amount will be more than what the vehicle is worth. In this case, the dealership will include the difference between the trade in value and your payoff amount onto your new vehicle. Consequently, if you had $3,000 in negative equity you would have to add that amount on top of the selling price of your new car, which means you will more than likely be upside down when you try to trade in for yet another vehicle. To avoid being upside avoid long-term contracts or opt for short-term leases, which will lower your monthly payments.


When considering to buy a vehicle it is only natural to think about affordability. The vehicle's (MSRP) or manufacture's suggested retail price is the first place many people start when considering cost. The MSRP is a calculated price that the automaker says the vehicle is worth; however, this price is not normally the amount you will actually pay. Unless you are trying to buy a vehicle that is a new entry or in hot demand, you will usually pay less than MSRP.


A vehicle's invoice price is the price the dealer paid the manufacturer for the vehicle. However, remember the dealership's goal is to sell vehicles for a profit; therefore, you will have to negotiate on a price somewhere usually between MSRP and invoice that will satisfy both parties.

Actual Selling Price

In most cases the actual selling price is somewhere between MSRP and invoice prices. Like any other business transaction, the final price you pay should satisfy both parties.


APR or Annual Percentage Rate is the fixed amount of interest you will pay for borrowing money from your finance source to take possession of the vehicle.


Rebates are discount monies given directly from the manufacturer, used to entice more people to buy particular vehicle lines. Customer Cash is a direct discount to you, the consumer, to use towards a down payment or to fight against negative equity. For example, if there is $500 customer cash on a vehicle you are interested in, then you are entitled to subtract $500 off the final negotiated price. Special discounts such as, the college graduate program, are rebates certain customers are entitled to for meeting specific criteria like recently graduating from college. Make sure you ask the dealership about all applicable rebates.

Beacon Score

Your Beacon score is the rating credit agencies assign based on your credit history. Simply, the higher your Beacon score, the lower your financing cost will be due to the lender's lower perceived default risk.

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